By Dave Moller and Laura Kurtzman, AP

SACRAMENTO - Gov. Arnold Schwarzenegger on Monday laid out a sweeping proposal to extend health coverage to nearly all of California's 6.5 million uninsured people, promising to share the cost among businesses, individuals, hospitals, doctors, insurers and government.

Reaction among those who would be affected was mixed in Nevada County.

Under Schwarzenegger's plan, all Californians will be required to have insurance. Businesses with 10 or more employees will have to offer insurance to their workers or pay into a state fund.

Smaller businesses will be exempt. More than 80 percent of California companies fall into this category, Schwarzenegger spokeswoman Julie Soderlund said.

Barbara Bashall, executive director of the Nevada County Contractors' Association, said the governor's plan could impact workers' wages within the construction industry, especially now when there is a softening in the market.

"Employee benefits are a huge cost to businesses," Bashall said.

Currently, wages are high in the industry because employers expect their workers to use a portion of those wages toward their medical insurance, Bashall said.

Bob Buhlis, businessman and president of the Nevada City Chamber of Commerce, saw it from both the employer and the employee angles.

"I think employees will love it, but most businesses in Nevada City have less than 10 employees and wouldn't be affected," Buhlis said. "The larger businesses will squawk if they have to spend more money. I commend the governor for doing it, but somebody has to pay."

Costs and incentives

Hospitals would have to pay 4 percent of their revenues into the state fund, while doctors will pay 2 percent under the governor's plan. The state also would increase its reimbursements to doctors and hospitals paid through Medi-Cal, which is widely seen as woefully underfunded.

That underfunding has been identified as part of the problem western Nevada County has had in recent years keeping and attracting family doctors.

Craig Wilcox at Sierra Nevada Memorial Hospital said it was too early to know how such a plan would affect the Grass Valley facility.

"It sounds like we'd get it on the back end" with increased Medi-Cal payments, Wilcox said, but added it was hard to really know until hospital officials see the full plan.

"The idea that taxing physicians' revenue will cause them to provide more care of higher quality defies understanding," said John R. Graham, director of Health Care Studies at the Pacific Research Institute in San Francisco. "Instead, they'll spend more time with accountants figuring out how to hide their incomes or prospecting for new practices next door in Nevada or Arizona."

Insurers will no longer be allowed to deny coverage to people because of their medical problems. All children, regardless of their immigration status, will be covered through an expansion of the state and federal Healthy Families program.

"My solution is that everyone in California must have health insurance," Schwarzenegger said. "If you can't afford it, the state will help you buy it."

The state would subsidize the estimated 1.2 million low-income people who do not currently qualify for coverage under Medi-Cal. They would be able to buy insurance through a state-run pool and would make small contributions toward their premiums.

Kim Belshe, Schwarzenegger's health secretary, said requiring people to obtain health insurance is vital to the plan's success. She said $10 billion to $15 billion in new money will go to doctors and hospitals under Schwarzenegger's plan, which is more than they will be asked to pay.

Last year, Massachusetts became the first state to require universal health insurance. The complex plan is still unfolding, but one provision requires companies to offer insurance to their employees or pay into a state pool.

The governor and the legislative leaders will now begin what may be a long process of trying to achieve a compromise. Republicans, who are in the minority, may have less of a say in whatever plan emerges unless it involves raising taxes, which requires a two-thirds majority.